The danger from dissident republicans and other paramilitaries risks undermining the country's bid for more tourists and extra investment, chairman of the rank and file policemen's group Terry Spence added.

Justice Minister David Ford warned there could be no sacred cows in the quest for public spending savings amid pressure on resources.

There have been more than 90 terrorist incidents since the beginning of the year, according to the federation head. Yet its annual conference near Belfast heard ministers were deluded about the gravity of the threat and persisting in running down the Full-Time Reserve, dismantling the intelligence networks and defortifying barracks.

Mr Spence said: "These hasty and indeed costly decisions were taken by people dazzled with the excitement of devolution.

"They were determined to see a new horizon of peace. Where they saw peace, most of us, who have lived and policed here, saw only an illusion and tried to tell them so but to our cost, they claimed to know better.

"Those who have come to serve in Northern Ireland should recognise the centuries-old nature of the divisions which plague our communities. Those divisions remain deep-seated."

He said the extra 1,000 officers could come from a mixture of the existing police reserve and the rest through recruitment, which has been frozen, including 50/50 take-up of Catholics.

Policing and justice powers were devolved to the Northern Ireland Assembly in April and David Ford appointed the first Justice Minister.

He was in the audience at the conference near Comber, Co Down, which was attended by over 170 delegates and representatives of UK, Ireland and other international police associations.

Since the beginning of the year there have been eight bomb and 15 gun attacks as well as serious rioting leaving officers injured.

Mr Spence added: "What makes this issue more frustrating for the federation is the capacity for self-delusion amongst ministers and politicians."

Fifty-four people have been charged with terrorism offences since the beginning of the year.

He added the threat must be addressed before the 2012 Titanic anniversary and Derry's City of Culture year in 2013 or tourists could be put off.

He also called for:

:: Powers of hot pursuit across the border with the Irish Republic for at least five miles when chasing terrorism suspects;